Research On The Effect Of Executive Incentive On Inefficient Investment

With the continuous development of modern enterprises,corporate ownership and management are gradually separated.Due to the inconsistency between the owner and the manager,coupled with the existence of information asymmetry and other issues,the existence of principal-agent costs in the enterprise is more serious.Investment is an important decision of the enterprise,the level of investment efficiency affects the success or failure of enterprise development.In order to solve the contradiction between the two sides and curb inefficient investment behavior,enterprises began to attach importance to a series of incentives for executives gradually.It is of great theoretical and practical significance to explore whether executive incentives can play a role in inhibiting the inefficient investment in enterprises.In order to explore its impact on inefficient investment,the executive incentive is divided into monetary compensation incentive,equity incentive and perquisite consumption.This paper divides the life cycle of the enterprise,and explores the influence of the three kinds of executive incentive methods on inefficient investment when the enterprise is in different life cycle stages from the perspective of the life cycle of the enterprise.This paper is divided into six parts.The first part is the introduction part.The second part is the literature review part.It mainly reviews the domestic and foreign literature on executive incentive,inefficient investment and the relationship between executive incentive and inefficient investment.The third part is the definition and theoretical basis of the related concepts.The concepts of executive incentive and inefficient investment are defined in detail,and the theory of information asymmetry,principal-agent theory,incentive theory and life cycle theory are discussed in detail.The fourth part is the theoretical analysis and research hypothesis.It analyzes the influence of the executive monetary salary incentive,the equity incentive and perquisite consumption on inefficient investment of Chinese enterprises.And it analyzes the influence of these three different executive incentives on inefficient investment of the enterprise in the period of growth,maturity and recession.On this basis,the corresponding research hypothesis is put forward.The fifth part is the research design and empirical analysis.Using the established model,this article carried out descriptive statistics,correlation analysis,regression analysis and robustness test.The sixth part is the conclusion and prospect of the research,the conclusion of this paper is summarized and analyzed in detail,and the shortcomings of this paper are put forward,and the relevant suggestions and prospects are put forward based on the present situation of our country.Based on the theoretical analysis,this paper regress on panel data from 2009 to 2015,and the conclusions are as follows:(1)In the case of the whole sample,executive monetary compensation incentive,equity incentive and on-the-job consumption have certain inhibitory effect on the inefficient investment of enterprises.(2)In the case of the whole sample,the three incentives are effective.When the enterprise sample is divided into growth,mature and recession,the impact of these three executive incentives on inefficient investment is different.The study found the three executive incentives are still valid in the growth and maturity periods of the enterprise,but monetary incentives inhibit the inefficient investment in the recession period.There is no significant relationship between equity incentive and firm's investment efficiency,and perquisite consumption has exacerbated the inefficient investment of enterprises,which is not conducive to the improvement of enterprise investment efficiency in the recession period.This paper explores the influence of executive monetary compensation incentive,equity incentive and perquisite consumption on the efficiency of enterprise investment in the period of growth,maturity and recession.It hopes to provide some reference for the different incentives of enterprises in different life cycle.So that enterprises can combine their own actual situation to develop a reasonable incentive program to play the greatest incentive effect.It can reduce the principal-agent problem and promote the management of enterprises to work hard to improve the efficiency of enterprise investment.